KENNEDY: A Plan to Solve the Medicaid Crisis

Congress just eliminated the extra Medicaid money it was giving Louisiana because of the hurricanes. With the state match, that means we are facing a deficit of $860 million in our Medicaid program, which provides health care for the poor, disabled and uninsured.

We knew this day was coming sooner or later. It came sooner because of federal budget problems. Louisiana wasn’t ready.

In response, the Jindal Administration has apparently decided to save money by choosing to deliver health care through “public-private partnerships” between the state’s 10 Charity Hospitals, which are run by LSU and treat many Medicaid and uninsured patients, and local hospitals. It’s not a new idea; the Public Affairs Research Council (PAR) has talked about it for years. (See Report 1.) Under this model, the role of Charity Hospitals would be reduced in favor of locally-operated facilities, thus saving the cost of the state operating its own hospitals, but it will take at least a year, and likely longer, to negotiate the partnerships, because local providers will understandably want to know how they’re going to get paid.

We don’t have years. The congressional Medicaid reduction starts in October.

Here’s what we could do to save money immediately as we transition to a different system of care:

  1. Require a modest ($2 to $10) co-payment by all Medicaid patients, like a dozen other states. (Seek federal approval only if strictly necessary.)
  2. Adopt the new Washington State model of prohibiting the use of Medicaid to pay for nonemergency emergency room visits, such as acne, diaper rash and sunburn, which Medicaid physicians can be treated more economically in a clinic setting.
  3. Aggressively implement Louisiana law (LRS 22:1065, LaHIPP) that allows the state to purchase private insurance offered by the employers of low-income citizens when it’s cheaper than covering them through Medicaid. The state needs to do more than hiring an out-of-state vendor to make robocalls and leave messages for potential enrollees.
  4. Reform the state Medicaid Preferred Pharmaceutical Drug List to include the most effective drugs at the lowest price for each illness.
  5. Review all Medicaid hospitalizations for medical necessity. In 2009, 80% of the 218,784 Medicaid hospitalizations, costing $900 million, were not reviewed for medical necessity, according to the Legislative Auditor. (See Report 2.) DHH says it is doing a better job. The Legislature should trust but verify.
  6. Reduce the size of the new $1.1 billion Charity Hospital currently being built in New Orleans. According to its own business plan, the hospital, at 424 beds, won’t cash flow now that we are reducing the size of the Medicaid program and the Governor has decided not to participate in the Medicaid portion of the federal Affordable Care Act (ACA). If we overbuild in New Orleans, there will not be enough money left to deliver health care to the poor and uninsured in the rest of the state.
  7. Eliminate the $148,500 a year position created by DHH to advise on implementation of the ACA, given the Governor’s decision to opt out.
  8. Demand a 5% discount on all DHH and Charity Hospital consulting contracts that do not directly involve the delivery of health care.
  9. With legislative action, return $300 million of prior years’ surpluses in the capital outlay (building) account to the general fund, use it to pay state debt, free up money for health care, and replenish the building account with the proceeds of a future bond issue.
  10. Spend the money budgeted to implement the state’s new computer “upgrade” on health care. The new system has serious problems, according to the Legislative Auditor. (See Report 3.)
  11. Expedite implementation of the Legislature’s decision to sell the uncollectible portion of the state’s $1.3 billion accounts receivable, use the proceeds to pay state debt, and free up money for health care.
  12. Assign medical supplies procurement for all 10 Charity Hospitals to a single inventory manager that uses a “just-in-time” inventory control system.
  13. Don’t close the Southeast Louisiana Mental Hospital. These patients will end up in jail or emergency rooms, which will cost more money in the long run.
  14. Let the Legislature make all final policy decisions after a public debate.

The implementation of these measures will save enough money immediately to give our Governor and Legislature the time to craft a health care delivery system that looks like somebody designed it on purpose.



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